Rights granted to existing shareholders entitling them to purchase additional shares result in a credit to Contributed Surplus.

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Quizplus · Accepted Answer

Rights granted to existing shareholders to purchase additional shares do not directly result in a credit to Contributed Surplus. These rights are essentially options given to shareholders and do not impact the company's financial statements until exercised. When exercised, the transaction typically results in an increase in share capital (or common stock) and additional paid-in capital (or contributed surplus) based on the proceeds received over the par value of the shares.

Rights Granted to Existing Shareholders Entitling Them to Purchase Additional